NextDayPC Helps Other VARs With White-Box Sourcing

Custom system solution provider NextDayPC is leveraging its sourcing capabilities with major distributors, along with its procurement Web site, to help smaller VARs. In an interview with Editor in Chief Michael Vizard, Ramin Movahedi, CEO of NextDayPC, talks about how the company can help VARs with sourcing issues.

CRN: How did get started?

RM: We started really to be an internal tool for our small consulting firm. As solution providers for 20 years, we had a difficult time finding products easily and comparing prices and preparing proposals for customers, etc.

All this started when we went to Ingram Micro and said give us price files so we could create an in-house tool. Then we took the next logical step, which was to create a storefront for ourselves so we had some e-commerce presence that other VARs took advantage of. After that, Ingram Micro started initially offering us better pricing if we wanted to consider sourcing most of our products through them. Suddenly our in-house tool that we were solely using to eliminate paperwork became a very robust engine to essentially get products at the best possible prices.

CRN: How many VARs are sourcing through you to the distributors?

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RM: Today we have about 6,500 solution providers who signed up with us. Of course, not everyone is buying [exclusively] from us. But we are, of course, letting them source products through us and take advantage of the purchasing power that the collective group has. A combination of ease of use, efficiency, saving time and money and decent prices has made the company grow to the levels that it has.

CRN: How many products are you carrying?

RM: We have managed to create a database of 300,000 products, and although the bulk of our sales come from maybe 10 percent of those products, people are guaranteed that if somebody has the product and if it's not Apple or Dell, it is in our database.

CRN: What kinds of deals are VARs doing through you?

RM: Our average ticket price is about $800. Our volume has doubled at least every year in the past four years. This year is a $10 million year for us and last year we did a little less than $5 million.

CRN: Is eBay a competitor in this space?

RM: Anyone who sells computer products is a competitor. But all eBay is doing is creating an opportunity for someone who has some products to sell them to somebody else who's looking for them. There aren't any systematic tools and anything outside of the standard eBay tools that are available. I don't consider them a true competitor.

CRN: What about CDW?

RM: I do consider CDW as a competitor. They are not supposed to be the source of products for computer resellers but it is very evident that the solution providers have to resort to working with CDW in some ways. They do it because people recognize the name and trust the well established, successful company that CDW is. In some ways, solution providers just are feeling a little bit disenchanted by all the cuts that major distribution companies have done and feel like, 'let's make the money on the service part, and let's not worry too much about making a few dollars on selling computer products.'

CRN: How big a threat is Dell to the small VAR?

RM: Dell is not as hard to compete with as CDW is. The situation with Dell is that they have been trying to be the first people who have the fastest product and they try to have crazy prices on some products that everybody sees and notices. That has made it a memorable company and anyone who looks for computers always thinks of Dell, at least, as one of the potential sources.

CRN: Why is it in the interest of Ingram Micro and Tech Data to support your efforts?

RM: The only disadvantage for them is the few points that they lose if they sell product through us rather than directly to the resellers; however, there are advantages. For instance, the type of clients who come to us, which are usually small resellers and some midsize resellers, actually end up costing Ingram Micro and Tech Data a lot more than they would like to spend on the account. Ingram or Tech [Data] may never admit this, but they have expressed to us even behind closed doors that they would much rather not have to deal with the phone calls that cost so much and the tech support inquiries that a small or midsize solution provider makes before they could close that $500 or $1,000 order.

Ingram also told me a couple of months ago in one of our meetings that they are just amazed at how little rate of return of products we have, which is the thing that cost them money. It seems to me that because of the support that we are giving the small VAR, the distributor sees cost savings.